Money advice for a lasting marriage
You've found The One, but before you exchange vows, you need to share credit card bills, bank statements and retirement savings plans.
"Couples need to be in alignment about their financial values and have a clear agreement about their priorities and goals," says Deborah Price, money coach and author of The Heart of Money: A Couple’s Guide to Creating True Financial Intimacy.
In fact, talking about money now — and settling on a plan to achieve financial security together — just might save your marriage later.
A Kansas State University study found arguments about money are "the top predictor of divorce," regardless of income, debt and net worth.
"When we have conversations about money, we develop a much closer bond and much stronger feelings of safety and intimacy," Price says.
Before you walk the aisle, make these 7 financial vows. Consider it a good start to your new life together.
If you’re planning to marry, it's time to talk about money — if you haven't already.
The conversation should cover annual income, savings and debts.
Don't forget to talk about credit scores, too. A survey by the credit bureau Experian recently found this was the No. 1 topic couples failed to address prior to marriage.
It's no wonder, though. Your credit score doesn't lie as a measure of fiscal responsibility.
"In a marriage, you need to have full financial disclosure," says Robin Vaccai, a certified financial planner in Poughkeepsie, New York. "If you go into the relationship with clear communication about money, it sets you up to have a healthy financial future."
Financial vow: Make a date to talk about your finances, and "put emotion and lust aside to have a heart-to-heart discussion," Vaccai says.
Celebrate your successes — stashing money in retirement accounts, establishing an emergency fund — and speak honestly about potential financial challenges.
You never gave much thought to splurges like pedicures or tickets to sporting events when you were single, but those expenses take on new meaning in a marriage.
Matt Bell, author of Money and Marriage: A Complete Guide for Engaged and Newly Married Couples, says spending you took for granted while you were single needs to be renegotiated after marriage.
"You have to talk about your priorities for saving and spending, to be on the same page, and if there are differences, you need to talk through them," Bell says.
Financial vow: Track expenses together. Once you have the numbers, create a budget that reflects your priorities as a couple. Bell advises couples to plan for living expenses and investments as well as splurges like romantic dinners and vacations.
"Look at all financial decisions in terms of what is best for the marriage," Bell advises. "Your attitude should be, 'We’re going to set goals together.'"
You share closet space, the TV remote and expenses. It’s a good idea to share a bank account, too.
Couples who want to keep some of their finances separate should consider a joint account to cover household expenses like the mortgage or rent, utilities and groceries.
"There’s no one right way to do this," says personal finance columnist Liz Weston. "Whether you have separate accounts or joint or a mix, both parties need to know where the money’s coming from, where it’s going and what the plan is for your future."
Financial vow: Have an honest discussion about which approach works best for your relationship. You should have equal access to the accounts, including debit cards, and signing privileges.
Still, even couples who deposit all of their money into joint accounts need a little financial autonomy.
"Most couples benefit from having at least some 'no questions asked' money that each person can spend however he or she likes," Weston says.
Researchers at the National Marriage Project found that credit card debt "fuels a sense of financial unease among couples," increasing the likelihood they'll spend less time together, argue more frequently and become unhappy in marriage.
"For married couples, just starting their lives together can be a huge source of stress," personal finance author Matt Bell says. "Debt only makes a marriage more difficult."
Start dealing with debt together as soon as possible. It’s a mistake, according to Bell, to treat any debt as "his" and "hers."
"If one person has debt before marriage, on the day they get married, they both have debt," Bell says.
Financial vow: Tackle debt as a team. Focus first on high-interest debt, like credit card balances. Once those debts are repaid, address other types of debt, like student loans.
Remember, paying down debt frees up money that can go toward joint goals like buying a house or saving for retirement.
When it comes to your credit score, your marital status is not considered, but your history is.
"Your credit scores are individual; there are no 'married' scores," says Beverly Harzog, an Atlanta-based credit card expert and consumer advocate.
Instead of closing the credit card accounts you established before marriage, Harzog advises couples to maintain individual accounts.
"A big part of your credit history is how long you’ve had the card," she says. "If you close individual accounts, it will impact your credit score."
You can open a joint account to cover household expenses.
Financial vow: Decide how you’re going to use credit.
If you use credit for everything but pay the bill at the end of the month and your partner only uses plastic for emergencies, it could cause disagreements. You may decide to take a his-and-hers approach to using individual cards, but it’s essential to have an agreement about how you plan to use joint accounts.
"Having the conversation now can help you avoid arguments when the bill comes in," Harzog says.
Contributing to a 401(k) or IRA can help you achieve financial security. It also comes with tax deductions and the benefit of compound interest.
Saving for the future does require some strategizing.
"You should be contributing enough to each plan to get the full match," says personal finance expert Liz Weston. "You don’t want to forgo free money or the extraordinary power of compounding, so take advantage of those plans."
Financial vow: For most people, investing in a target date fund is the most prudent financial move when it comes to retirement savings.
An experienced financial adviser also can help you map out a financial future, including the investment strategies that best fit with your goals.
Even though you might have individual retirement accounts, you’re still working toward the joint goal of a stable financial future.
When you get married, you might be saying “I do” to additional benefits. Many companies offer health insurance, life insurance and other benefits to employees and their spouses.
"Checking into what benefits are available to your spouse should be one of the first things you do when you go back to work after your wedding," says Josh Kadish RFC, partner with Chicago-based financial planning firm RPG Life Transition Specialists.
Even if spousal benefits aren’t available, it’s essential to update the details of your own benefits, including the beneficiaries on life insurance policies and retirement accounts.
Financial vow: Make an appointment with your human resources department to determine whether coverage is available for your spouse. Based on any changes, decide whether you need additional coverage to protect your new family.
If you both have health and life insurance coverage through work, compare plans. One insurance company might have lower copays or better prescription drug coverage, in which case it makes financial sense for both of you to be on the same plan, Kadish says.
Building wealth can be easier than you think if you make a few savvy decisions and avoid a few stupid mistakes.
Click here to get started.
If you're having trouble selling your house, there's a good chance you might be doing something wrong. Here's how to fix your problems.
Click here to get started.